Jeremy Julian

Automated Tipping Systems – One Solution to the Industry’s Post-Covid Staffing Crisis

September 7, 2021

Can an automated tipping system solve restaurant turnover?

The restaurant industry has always been notorious for high rates of staff turnover.

And the COVID-19 pandemic has only served to exacerbate the problem.

Industry sources report the loss of at least 2.4 million restaurant jobs during the pandemic. Now, you might think this means a huge pool of experienced staff will be available as the economy reopens.

But in those months when the hospitality sector was completely closed down, large numbers of these staff were forced to seek completely new types of employment.

Many have not only survived but prospered. And unless the pay, terms, and conditions offered by restaurants are sufficiently attractive, they will be in no hurry to return.

The Problem of Wage Inflation

When the demand for labor exceeds supply – as it is now doing in many regions and – restaurant industry sectors, the inevitable consequence is upward pressure on wages.

Demands of $20 and more per hour are now not uncommon for experienced staff, substantially more than the legal minimum wage and a problem for businesses that have lost a great deal of revenue during the pandemic and have always existed on very tight margins.

Clearly, your business cannot operate without quality staff, so you may feel you have no alternative but to pay the going rate.

Why Increasing Prices is Not the Answer

The obvious way to preserve your margins is through a commensurate increase in your prices, but this, of course, brings its own problems in the highly competitive post-COVID world.

Many former regular customers may have lost the restaurant habit during the enforced closure of the pandemic, and become used to the lower cost and convenience of eating at home.

Offering a value for money experience will be key to tempting them back.

How Automated Tipping Can Help  

And facilitating the payment and collection of tips using an automated system is a great way of increasing your overall revenues without the negative consequences of imposing an across-the-board price rise.

When tipping is included within an automated POS system, the overall transaction speed is significantly increased while the number of contact points between server, cashier, and customer is reduced – a significant consideration for many customers after COVID.        

There’s also evidence that a psychological “nudge” factor can help boost tips and revenues.

How to Include Automated Tipping in your POS System

Input a schedule of suggested tip amounts in your POS so that they are prominently visible to your customer, including both percentages and their equivalent cash amounts. And start at the lowest level, which might be, say, 20% that your staff will find acceptable. Also, put in 22.5 and 25% figures and you will likely find many customers going for those levels.

Nobody, after all, likes to be seen to be “cheap”. And for this reason, paradoxically, including a “No Tip” button will also help boost earnings.

Incorporating these options in a contactless restaurant POS system also saves customers the chore of calculating the correct tip in their heads or with pencil and napkin, and avoids that desperate fumble for the right amount of cash, which fewer and fewer customers now carry.

Benefits for Both Your Staff and Your Business

Depending on the policy of your outlet, your POS system can also be set up to record the total tips received per session, or to apportion them to particular servers.

All these measures can be expected to incentivize staff by maximizing their total earnings, while allowing you to keep your headline prices unchanged.

And, as another benefit, a modern, efficient, POS system will enable faster table turns and thereby increase your total revenues over time – perhaps enabling you also to offer higher wages.  

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